Lungu, Mutati take over Intermarket bank using IDC

Finance minister Felix Mutati has told parliament that the Industrial Development Corporation and other entities such as Madison have taken over Intermarket Banking Corporation.

Last year, the Bank of Zambia took possession of Intermarket after it was alleged that it became insolvent.

But now it has been sold to a government owned organisation. It’s clear that other entities such as Madison will be insignificant shareholders; the bank will be controlled by IDC chaired by Lungu.

The Industrial Development Corporation is wholly owned by the Zambian government. It was incorporated in early 2014.

Its sole shareholder, to which it distributes dividends, is the Minister of Finance. Edgar Lungu chairs all board meetings and has the power to appoint, reappoint, or remove Board members. So Mutati was actually telling parliament that he and Lungu have bought Intermarket banking corporation.

The Board is accountable to the President. The Board comprises [3] Cabinet Ministers of Finance, Commerce Trade and Industry, and Agriculture; [2] civil servants, the Secretary to the Treasury and Permanent Secretary for Commerce Trade and Industry; [7] private sector members and [3] Executive Directors of the IDC as ex-officio members.

Below is what Mutati told parliament:

INTERMARKET BANKING CORPORATION
(In Possession)

MINISTERIAL STATEMENT

Mr. Speaker, the House will recall from my previous statements that the Bank of Zambia (BoZ) took possession of Intermarket Banking Corporation Zambia Limited (IBC) on 28th November 2016 because it had become insolvent and was unable to meet its obligations as they fell due.

Sir, this possession was for an initial period of 90 days, during which the BoZ was required to prepare a Statement of Affairs of the Assets and Liabilities of the bank and engage potential shareholders with the capacity to restore the bank to solvency at the end of the period in line with the provisions of the Banking and Financial Services Acts (BFSA).

On 27th February 2017, the BoZ announced that it would restructure the IBC to facilitate for its reopening.

Mr. Speaker, it is in this regard, that I am pleased to announce that the BoZ has now reached an agreement with the shareholders on how to restore the bank to its solvency and long term sustainability.

Sir, the shareholders comprise a consortium that includes the Industrial Development Corporation (IDC) and the Madison Group among others. We are open to other investors who may wish to take equity in the bank. In addition, a management team headed by an interim managing director has been identified by the shareholders and has since commenced work with a view to opening the bank expeditiously.

The interim managing director will in due course announce the reopening modalities and associated timelines.